Change: How do we manage it?

Machiavelli had a pretty good understanding of how difficult it can be to manage significant change. He went on to observe that the innovator has many enemies in those who have done well under the old order and only lukewarm defenders in those who will do well under the new order. Even those who will do well in the new order recognize the risk involved in change and tend to wait to see how thi...

Ron Moore, Managing Partner, The RM Group, Inc., Knoxville, TN

04/28/2003

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Machiavelli had a pretty good understanding of how difficult it can be to manage significant change. He went on to observe that the innovator has many enemies in those who have done well under the old order and only lukewarm defenders in those who will do well under the new order. Even those who will do well in the new order recognize the risk involved in change and tend to wait to see how things play out before they commit to the new order. Put another way, significant change is risky, and requires a compelling reason to support the risk being taken.

How do we make significant change to an organization, particularly in a culture that has steeped in its own history for decades? With some difficulty. Outlined below is a model for managing such a change. It's not a perfect model, and probably won't fit all circumstances, but it does address most of the major issues in change management.

Understand the difference between leadership and management before beginning.

Articulate a compelling reason for change.

Clearly communicate your strategy for achieving the change and the goals desired.

Facilitate employee support in developing and implementing the change process.

Measure the results, reinforce good behavior, and punish bad behavior.

Stabilize the organization in the new order.

Go to step two: change is a continuing process.

Leadership and management

Warren Bennis articulated the difference between leadership and management as follows:

Leaders:

Managers:

• Challenge status quo

• Accept the status quo

• Trust

• Control

• Innovate and develop

• Administer and maintain

• Ask what and why

• Ask when and how

• Do the right things

• Do things right

• Watch the horizon

• Watch the bottom line

In Bennis's model, leaders foster change and create an environment where change is the norm, whereas managers stabilize the organization and assure that the changes are well implemented. Which is more important? It depends. Could we do without one or the other? No. Both sets of behaviors are necessary to achieve excellence. However, people who are more prone to have Bennis's leadership characteristics are better at fostering change, whereas people prone to have manager characteristics are better at stabilizing and institutionalizing the changes once they're made. We must recognize that different approaches may be needed, depending on where you are in the change process.

Articulate a compelling reason for change

This is perhaps the most important step in the change process. If there is no compelling reason for change, then change is not very likely. The lack of a compelling reason will allow those who prospered in the old order to hold sway over those who are only lukewarm in their support. Change is risky and getting more than lukewarm support requires a compelling reason.

What are some of those reasons? One of the more obvious ones is that if we don't change, we'll be shut down. That's pretty compelling. Another might be a recent accident or death that was the result of poor practices. Another might be that the CEO has demanded change, or heads will roll. Though this one will have some immediate impact, it's less likely to be sustainable, particularly at the shop floor level.

Communicate the strategy and goals

All companies have areas where they are not satisfied with their current state. That creates a compelling reason for change. Once you've identified the reason for change, then a strategy and set of goals must be developed and communicated so that it gives people a clear view of the changes needed, the compelling reasons for the change, the strategy for making the changes, and the ultimate goal or end state. If appropriate, you may want to make it clear that not achieving the desired goals is not an option. Exactly how and when they are achieved is an option and is something that you'll seek the support of everyone in developing. Of course, we'll need to be able to measure against those goals to help assure that we've met the goals.

A word of caution may be appropriate here. The strategy needs to be reasonably well defined so that it can be understood by the employees and can assure alignment of the organization to the strategy and goals. One of the most important things a leader can do is, in fact, align the organization to the strategy and goals. However, it must not be so detailed that it leaves little room for change as we proceed with its implementation, and each step of the change process has a feedback loop that allows for improving the process itself.

In setting goals, one of the more common techniques is to use benchmark data to determine gaps in current performance and then seek to close the gap by achieving "benchmark" performance. Using benchmarks is an excellent way to determine the gaps in your performance as it relates to certain measurements. What it often fails to do is provide an understanding of how that performance was achieved, or a process for closing the gap.

Facilitate employee support in the implementation process

We've heard many times that people don't want to change. That may or may not be true. What I've found is that people will change if a) given a compelling reason to do so, and 2) if they participate in creating the change process. Or as Margaret Wheatley said, "People own what they create." Once a compelling reason has been established, facilitating participation in defining the specifics of the changes to be made provides them with a sense of ownership and control in the change process.

Celebrate the early successes, and learn from the early failures (the best learning often comes from failure), and continue to foster and reward a continuous improvement environment. But recognize that the concept of "low hanging fruit" is more often than not largely a myth, since the improvement targets are constantly moving.

The low hanging fruit you might pick today may end up being replaced by other fruit tomorrow, so you must have a process for sustaining the improvements you achieve, and then looking for the next opportunity.

Measure the results

As Joseph Juran said, if you don't measure, you can't manage it. On the other hand, don't measure it if you don't intend to make it better. The measure loses credibility. Once the strategy is established along with its commensurate goals, we must set up a set of measures that assure we're moving toward the appropriate goals. Start with high-level business measures that reflect accomplishment of the goals related to the strategy. Some examples include unit cost of production, return on net assets, gross profit per product line, and so on. These will be lagging indicators, and a bit like looking in the rear view mirror to see where you've been. As such, these lagging indicators should be "cascaded" down through middle management to the shop floor, where you'll need some leading indicators. These are the things that you must do to improve the lagging indicators.

Reward good behavior

Whatever you reward, tolerate, or subsidize, you'll get more of it. The federal government has demonstrated this principle for decades, and on a personal level, as parents, we've known for years that our children will find the limits of our tolerance, and then exercise them. For our purpose, however, I'd rather focus on rewarding good behavior.

Here I'm not really talking about pay for performance, since the data generally say that pay for performance does not work very well and its effects are not lasting. Perhaps "reinforce" would be a better word to use than "reward," since rewards are usually associated with money. Money is not what I'm suggesting, so long as your people are compensated at or near market rates in an internally equitable manner. What I am talking about is reinforcing those behaviors that have resulted in improvements that should improve the leading or lagging indicators. This includes doing things like thanking people for a job well done; having them do a presentation to your boss; announcing the results of their efforts in a newsletter; asking their opinion on a problem area; facilitating their participation on improvement teams, and so on.

Don't tolerate bad behavior

Any time you go through a change process, you can expect some "casualties." Jim Collins says we need to get the "right people on the bus," and the "wrong people off the bus." Getting the wrong people off the bus will result in "casualties." If in spite of your best effort to engage people in the change process you find that some are simply unwilling to make the changes needed, then you must take swift action to make sure people understand how serious you are about the need for change. Tolerating foot-dragging, recalcitrant behavior, and passive aggressive behavior (agreeing, but not acting) will scuttle your efforts to change the organization. This is particularly true if these behaviors are being exhibited by people in leadership positions.

Stabilize the organization in the new order

Once substantial changes have been achieved, these changes need to be stabilized in the new order of things. We need to put certain practices into procedures. We need to train the appropriate people in those procedures. We need to audit our compliance to those procedures. We need to measure the results we're getting from those practices. We need to do these things 21 times before they become habit and part of our new culture and behavior.

Once stabilized and habitual, we need to continue to look for additional things to improve and refine our practices. Hence we need a process for continuously seeking ways to improve, and accepting that some proposed changes will fail, and in doing so will also provide a learning experience. As we do so, we will be instilling a culture that expects and welcomes managed change as an ordinary part of the culture. This is perhaps the hardest part; that is, creating a culture where change is the norm.

Author Information

Ron Moore is Managing Partner of The RM Group, Inc., Knoxville, TN, and author of Making Common Sense Common Practice: Models for Manufacturing Excellence. He can be reached at 865-675-7647 or by e-mail at RonsRMGp@aol.com .

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